Qualifying and quantifying fuel poverty across the European Union using consensual indicators.

Transcription

1 Qualifying and quantifying fuel poverty across the European Union using consensual indicators. Harriet Rosalind Thomson Supervised by Dr. Carolyn Snell Submitted in part fulfilment of the requirements of the MRes in Social Policy Department of Social Policy and Social Work University of York September

2 Abstract At present, fuel poverty is a developed concept within the United Kingdom and Ireland; however, with the accession of numerous Former Soviet Union countries to the European Union, rising fuel prices, and the move towards a liberalised energy market, we are in a policy environment where fuel poverty is being increasingly recognised as a European wide concern. This dissertation seeks to explore the emergence of fuel poverty policy across the European Union, and to subsequently quantify the levels of fuel poverty. In this dissertation, a meta-analysis of emerging fuel poverty policy, and policies that impinge upon fuel poverty alleviation was conducted, in addition to a statistical secondary data analysis of European data on income and living conditions. The results indicate that the perception that Southern European countries do not experience fuel poverty due to warmer climates is incorrect. Eastern European countries are also found to suffer from high levels of fuel poverty, based on the proxy indicators utilised in this dissertation. The results further indicate that the concept of fuel poverty is not widely recognised across the European Union, and protection schemes within the domestic gas and electricity market are not uniform across Europe. This dissertation offers an original contribution to a policy area that is at present limited by out-dated research, and a lack of agreement on a common definition of fuel poverty. The dissertation concludes that more must be done a European level to tackle the emergence of fuel poverty. 2

3 Acknowledgments I would like to thank Dr Carolyn Snell for her continued patience, guidance and support as my dissertation supervisor. I would also like to thank the many people who have taken the time to help me with getting to grips with the EU-SILC dataset. This research falls within the umbrella of work at the University of York examining the issues of poverty and social exclusion across the EU (see Bradshaw and Mayhew, 2011), which has enabled access to the EU-SILC data. Thanks are also due to the eaga Charitable Trust who generously provided funding for my Master s dissertation. And finally, thank you to my friends and family for your continuing support throughout my degree. 3

4 Contents List of Figures... 5 List of Tables... 6 List of Acronyms... 7 Chapter One: Introduction... 8 Chapter Two: Literature Review Chapter Three: Overview of study countries Chapter Four: Methodology Chapter Five: Meta-analysis Findings Chapter Six: Summary of key fuel poverty indicators across the EU Chapter Seven: Modelling fuel poverty indicators Chapter Eight: Discussion and Conclusions Bibliography Appendix One: EU-SILC variable formats Appendix Two: Grey literature meta-analysis matrix

5 List of Figures Figure 1: Households unable to heat home adequately across EU Figure 2: Annual heating degree days across EU-27 in Figure 3: Overall household energy consumption across EU Figure 4: Household energy consumption for space heating in 2000 and Figure 5: GDP per capita across EU Figure 6: Human Development Indices for EU-27 in the year Figure 7: Weighted EU-SILC household sample distribution Figure 8: Household unable to pay to keep their home adequately warm Figure 9: Households in arrears on utility bills in the last 12 months by country Figure 10: Households in housing that has leaks, damp or rot by country

6 List of Tables Table 1: Author s summary of the relevant European Council Directives Table 2: Subjective and objective indicators used in Healy and Clinch's 2002 crosscomparative study Table 3: EU regions as specified in the Multilingual Thesaurus of the EU Table 4: Key fuel poverty related search terms used for analysing NEEAPs Table 5: Cross-sectional household sample sizes for 2007 EU-SILC data Table 6: EU-SILC variables selected for analysis, and data transformations conducted Table 7: Definitions/usage of terms extract from meta-analysis matrix Table 8: economic and non-economic support within gas and electricity markets extract from meta-analysis matrix Table 10: Chi square and Cramer's V values Table 11: Cramer's V significance summary Table 12: Logistic regression model to predict household ability to pay to keep their home adequately warm Table 13: Logistic regression model statistics Table 14: Summary of logistic regression models for the worst three performing countries Table 15: Logistic regression model statistics Table 16: Logistic regression model to predict household arrears on utility bills Table 17: Logistic regression model statistics Table 18: Summary of logistic regression models for the worst three performing countries Table 19: Logistic regression model statistics Table 20: Logistic regression model to predict presence of leaks, damp or rot Table 21: Logistic regression model statistics Table 22: Summary of logistic regression models for the worst two performing countries Table 23: Logistic regression model statistics

7 List of Acronyms EESC EPEE EU EU-SILC EWM GDP HDI NEEAP European Economic and Social Committee European Fuel Poverty and Energy Efficiency Project European Union European Union Statistics on Income and Living Conditions Excess Winter Mortality Gross Domestic Product Human Development Index National Energy Efficiency Action Plan 7

8 Chapter One: Introduction Increasingly over the last decade, the European Union (EU) has taken a prominent role in promoting energy security, climate change mitigation and sustainable development on a European level. Policy has been implemented in a range of areas, from the European Council Directive 2009/72/EC on common rules for the internal market in electricity, which requires Member States to undergo electricity market liberalisation, the European Council Directive 2003/87/EC establishing a scheme for greenhouse gas emission trading for energy intensive industry, to the Europe 2020 strategy, which amongst other objectives, aims to reduce greenhouse gas emissions by 20 per cent, increase the share of renewable energy in the energy mix to 20 per cent and achieve a 20 per cent increase in energy efficiency by the year 2020 (European Commission, 2010a). By contrast, policy specifically addressing fuel poverty has been limited, despite the intrinsic tension between climate change and fuel poverty. Whilst climate change could have some positive effects for countries such as Canada, Russia and Scandinavia where an increase in temperatures will produce higher agricultural yields, lower winter mortality, lower heating requirements (Stern, 2006: 1), moves to reduce emissions of harmful gasses and mitigate climate change will increase the financial burden on households if levies are added to household utility bills. In particular, low income households are at risk of disproportionately financing climate change policy; with Owen (2008) stating schemes such as EU emissions trading and Renewables Obligations are regressive as they are paid for by gas and electricity consumers, and 8

9 energy bills represent a more substantial part of expenditure for low income than better off households (Owen, 2008: 4). Low income households are also more vulnerable to climate change as they are more likely to live in poor quality housing in higher-risk areas and have fewer financial resources to cope with climate change (Stern, 2006: 1). This, in conjunction with the drive towards a single liberalised energy market, the accession of numerous Former Soviet Union countries and the subsequent removal of subsidised energy tariffs, means it is increasingly likely that fuel poverty is a European-wide phenomenon. Certainly, there have been discussions on fuel poverty, particularly in the European Council Directive 2009/72/EC on common rules for the internal market in electricity, which requires Member States to define a concept of vulnerable customers which may refer to energy poverty and, inter alia, to the prohibition of disconnection of such customers in critical times (2009: 65). However, electricity disconnection is only one potential aspect of the complex phenomenon that is fuel poverty. Aside from in the United Kingdom and Republic of Ireland, there are no official definitions of fuel poverty in the remaining twenty-five Member States, and levels of awareness regarding fuel poverty are likely to vary. The Irish government defines fuel poverty as the inability to afford adequate warmth in a home, or the inability to achieve adequate warmth because of the energy inefficiency of the home (Office for Social Inclusion, 2007: 67), whereas, in the United Kingdom, a fuel poor household is: one that cannot afford to keep adequately warm at reasonable cost. The most widely 9

10 accepted definition of a fuel poor household is one which needs to spend more than 10% of its income on all fuel use and to heat its home to an adequate standard of warmth. This is generally defined as 21ºC in the living room and 18ºC in the other occupied rooms (DTI, 2001: 6). In the United Kingdom, the main drivers of fuel poverty are said to be a combination of energy efficiency of the home; fuel costs; household income (DTI, 2001: 7), however, as will be explored in the following chapter, the fuel poverty drivers are likely to vary between Member States, due to differences in welfare provision, progress in energy market liberalisation, housing stock quality and geographical factors. Despite lacking official definitions to measure fuel poverty by, there are indications that some form of fuel poverty does exist in Member States other than the United Kingdom and Ireland, with Herrero and Ürge-Vorsatz (2010) asserting that in Hungary, there are concerns about the affordability of energy services as income is well below EU average, energy prices have increased substantially and there is evidence of the low energy performance of its residential stock (2010: 4). Similarly, a European evaluation project of fuel poverty in five EU Member States estimates that due to rising gas and electricity costs, housing built before thermal insulation regulations existed and poverty rates, between 50 million and 125 million people in Europe are estimated to be fuel poor (EPEE, 2009: 4). Clearly, fuel poverty in the EU is an emerging and continuing problem, and this dissertation aims to fill a gap in existing knowledge of the existence of fuel poverty across Europe by considering the questions: how is fuel poverty conceptualised across 10

11 the EU? And what levels of fuel poverty exist? The research questions will be addressed in two ways. Firstly, existing and emerging definitions of fuel poverty across the Member States will be explored through an analysis of literature surrounding fuel poverty at the EU level in addition to existing national fuel poverty literature in individual Member States. Due to the emerging nature of fuel poverty in some Member States, a comprehensive grey literature search will also be undertaken. Secondly, a secondary analysis of the EU Statistics on Income and Living Conditions (EU-SILC) will be conducted in order to quantify fuel poverty in the EU. The following section, Chapter Two, will explore and discuss the relevant fuel poverty literature, including the limited literature that exists concerning European level fuel poverty; however, academic literature and examples of policy in the following chapter will be predominantly drawn from British sources as the United Kingdom is a policy leader in fuel poverty strategy and one of the only countries to have a strong academic understanding of fuel poverty issues, and although some contextual issues exist, the application of ideas and knowledge to other Member States is possible. In Chapter Three, a contextual background to the twenty seven Member States will be provided, with information presented on climate conditions, energy efficiency levels and human development, in order to understand the differing contexts for fuel poverty policy. Chapter Four is the methodology chapter and discusses the relative advantages and weaknesses of the research methods utilised during this research, whilst Chapter Five presents the findings of the meta-analysis, and Chapters Six and Seven present the secondary data analysis results. Finally, Chapter Eight draws together the meta-analysis and secondary data analysis results 11

12 and discusses the findings in parallel, with reference to existing literature, and offers conclusions on the extent to which the research has answered the previously stated research questions. In addition, Chapter Eight offers policy recommendations and suggests areas of future research that are necessary to advance fuel poverty policy on a European level. 12

13 Chapter Two: Literature Review What is fuel poverty? Drivers and definitions of fuel poverty Throughout this dissertation, fuel poverty will be the primary and preferred term used to describe a household s inability to heat the home; however, the term energy poverty will also be mentioned, most commonly in relation to European Council Directives which use the term instead of fuel poverty. Use of the term energy poverty is problematic, with no official definition provided in European Council Directives, and with varying existing definitions. In its broadest use, energy poverty has a wider definition than fuel poverty, for example, the European Economic and Social Committee (EESC) define energy poverty as occurring when a household finds it difficult or impossible to ensure adequate heating in the dwelling at an affordable price and having access to other energy-related services, such as lighting, transport or electricity for use of the Internet or other devices at a reasonable price (2011: 54), however, alternative definitions have been proposed in academic literature, for example, Buzar (2007) defines energy poverty in a similar manner to fuel poverty: the inability to heat the home up to a socially-and materially-necessitated level. A household is considered energy poor if the amount of warmth in its home does not allow for participating in the lifestyles, customs and activities which define membership of society (2007: 9). A pronounced level of confusion exists surrounding the issue of defining energy poverty, the implications of which are a lack of clarity 13

14 regarding who is classified as energy poor, and subsequent issues devising a policy framework to alleviate energy poverty. As discussed previously, across the EU, only the United Kingdom and Ireland have definitions for fuel poverty, although, Ireland has only recently begun to address fuel poverty, with initial references to fuel poverty from the Department of Communications, Marine and Natural Resources (2006), and further reference from the Office for Social Inclusion (2007), whereas in the United Kingdom, the fuel poverty movement began in the 1970s following world oil price increases in (Boardman, 1991: 11) and therefore, references will be drawn from the United Kingdom due to the advanced nature of fuel poverty policy. As referenced in Chapter One, fuel poverty in the United Kingdom is considered to be the inability to warm a home to an adequate standard which the United Kingdom defines as 21ºC in the living room and 18ºC in the other occupied rooms (DTI, 2001: 6), and an inability as spending over 10 per cent of gross household income on fuel. The United Kingdom definition is based on required fuel spend, rather than actual spend, and is modelled on the basis of a household occupying their home for 9 hours a day if they work, or 16 hours a day if they are likely to be at home all day (Boardman, 2010). In modelling fuel poverty levels, the United Kingdom Government account for various factors, in particular, with reference to household fuel consumption, the following factors are included: the size of the property; the number of people who live in the dwelling; the energy efficiency of the household; the energy mix usage of each household (DECC, 2010: 2). The current definition enables 14

15 hypothetical levels of fuel poverty to be easily modelled, however, the assumption of households heating their rooms 18ºC and 21ºC as outlined above, does not accommodate subjective preferences for the level of heating in a house; Harrington et al state a formula-based fixed model of acceptable heating, perhaps driven by the tyranny of numbers, may give a misleading picture of household need. Ideally, policy should be based on a better understanding of the variability of heating requirement (2005: 266). Whilst, in their work on identifying fuel poverty, Waddams Price et al found that many households who spend more than 10% of their income on energy do not feel fuel poor, and not everyone who feels fuel poor spends more than 10% (2007: 18). Furthermore, the definition has been criticised for failing to account for cultural differences in household use, with Todd and Steele (2006) stating whereas white householders would generally only use one room as their main living room, it is traditional for those of the BME [black and minority ethinic] householder to use two rooms. This is significant in energy usage terms (Todd and Steele, 2006: 300). Boardman, who pioneered the concept of fuel poverty in the United Kingdom (see Boardman, 1991), recognises that the current modelled expenditure definition is flawed, the vulnerable group is too big, and there is no recognition of the calibre of the home. These combine to make the present definition inaccurate (Boardman, 2010: 42). The expenditure definition has been further criticised for its inability to capture the deprivation and social-exclusion elements of fuel poverty (Healy and Clinch, 2002: 15

16 9), its tendency to report higher levels of fuel poverty than consensual measures 1 (ibid) and the apparent lack of scientific basis for a 10 per cent threshold (ibid). Healy and Clinch also assert that the expenditure definition cannot be used for cross-country analysis of fuel poverty as data on fuel expenditure as a proportion of household income on a micro level is not available in many European countries (2002: 9). As will be explored later in the chapter, an alternative to the expenditure approach is to use consensual indicators, as employed by Healy and Clinch (2002). Founders of the consensual poverty approach suggest that poverty measurements based on the number of people with an income below a set percentage is flawed as it does not relate to the needs of individuals, or to any agreed definition of what it is to be poor (Gordon et al, 2000: 8), and whilst they were referring to the broader concept of poverty, the principal can also be applied to fuel poverty. Aside from the contested issue of defining the characteristics of a fuel poor household, there is broad consensus on the causes of fuel poverty, which in the United Kingdom are accepted as a complex interaction between low income and domestic energy efficiency (Healy and Clinch, 2002: 4), in addition to other contributory factors such as the absence of savings and living in rented accommodation, both of which limit an occupant s opportunities to improve the property (Boardman, 2010: 21). However, the drivers may differ in other Member States, particularly in accession states, due to differing levels of energy market liberalisation and welfare provision. 1 Consensual measures of fuel poverty use data such as the presence of mould, and the absence of central heating, rather than focusing exclusively on household fuel expenditure, as will be explored later in this chapter. 16

17 Health and wellbeing As noted above, the United Kingdom is the primary source of knowledge regarding fuel poverty and its effects, particularly health and wellbeing effects. There have been several robust studies examining human health in damp and cold housing conditions, such as that by Evans et al (2000) and Gemmell (2001). The Evans et al study found correlations between cold and damp housing and health outcomes, although, regression modelling found that being unable to keep the home warm enough was a more important explanatory variable for health outcomes than damp housing, though the authors recognise the two are closely related, and thus the combined effects are likely to be shown in the results (Evans et al, 2000: 677). Similarly, Gemmell s (2001) study of indoor heating, housing conditions and health found that respondents who reported feeling cold in winter most of the time were over three times more likely to suffer from a limiting condition and almost five times as likely to report fair or poor self assessed health (2001: 929). However, while both studies have provided evidence of an association between cold housing and health outcomes, it is not necessarily a causal relationship, although as Gemmell explains, living in a cold house will almost certainly exacerbate existing conditions (2001: 929). The likelihood of suffering from a range of illnesses such as influenza, heart disease, and strokes (DTI, 2001: 7) are all increased by living in a cold home, in addition, occupants are also at an increased risk of suffering from asthma due to the growth of fungi and dust mites that cold homes promote (DTI, 2001: 8). Several studies have documented the increased likelihood of the use of health services by people 17

18 living in cold homes; Evans et al found those who had difficulty keeping their home warm enough most of the time were nearly twice as likely to visit the surgery four or more times, and twice as likely to use outpatient departments as those who never experienced this problem (Evan et al, 2000: 678), whilst a study of the impact of fuel poverty on children found that for infants, living in fuel poor homes is associated with a 30% greater risk of admission to hospital or primary care facilities (Liddell, 2008: 2). Therefore, intervention programmes that aim to reduce fuel poverty also have the additional potential of reducing negative health impacts, indeed, an evaluation of a fuel poverty housing intervention in Northern Ireland found that energy efficiency improvements could lead to health and wellbeing improvements, as well as increased comfort and reduction in the use of health services (Shortt and Rugkåsa, 2007: 99). Fifty-four homes had energy efficiency measures installed, including central heating systems. For total intervention households, Shortt and Rugkåsa found a significant decrease in both the numbers of householders reporting arthritis/rheumatism and the numbers reporting an other form of illness (2007: 105), indicating the significant health association with a cold home. The implications of fuel poverty on health spending are too serious to ignore; a cost benefit analysis of fuel poverty reduction among children in the United Kingdom suggested that for every spent on reducing Fuel Poverty, a return in NHS savings of 12 pence can be expected from children s health gains. When adults in the family are also included, this increases to 42 pence (Liddell, 2008: 2). In addition, a randomised control trial of heating interventions in New Zealand found that school absences reduced on average by 21 per cent for 18

19 asthmatic children whose household had received a new heating system (Free et al, 2010: 379). Beyond physical illnesses such as asthma and influenza, fuel poverty can also affect mental wellbeing and social contact, as well as the development of children. Harrington et al in their qualitative study of understanding and coping with fuel poverty found that respondents identified the damaging psychosocial consequences of living in a cold home, including depression, social isolation and constraints on mobility (2005: 266). Some respondents experienced reduced social contact, with one stating I very rarely go out and have few luxuries because I prefer to pay my bills and keep the house warm (Harrington et al, 2005: 262), which will have an impact on their happiness and wellbeing. With regard to children in fuel poor homes, Liddell explains that poorer weight gain and lower levels of adequate nutritional intake have been found a heat-or-eat effect (Liddell, 2008: 2). The most extreme consequence of fuel poverty is the phenomenon of excess winter mortality. Excess winter mortality (EWM) is defined as the surplus number of deaths occurring during the winter season (December to March inclusive) compared with the average of the non-winter seasons (Healy, 2003b: 785). EWM is a phenomenon found across the EU, and not just isolated in the United Kingdom and Ireland. In his study of EWM across EU-14 from 1988 to 1997, Healy found Portugal and Spain suffered from the highest levels of EWM (2003b: 784), which contradicts the perception that southern European countries are not affected by EWM, and indeed fuel poverty, due to their milder winter climates. Healy believes the high EWM in 19

20 southern Europe is due to warmer all year climates and resulting poor domestic thermal efficiency, whereas countries with severe climates such as those in Scandinavia have to maintain high levels of thermal efficiency, as temperatures demand that houses must retain warmth (2003b: 786), and consequently, Scandinavian countries have low levels of EWM. Healy suggests these high levels of EWM could be reduced through improved protection from the cold indoors, increased public spending on health care, and improved socioeconomic circumstances resulting in more equitable income distribution (Healy, 2003: 784). Why is fuel poverty a policy issue at the EU level? European Council Directives To date, there has been no specific policy package addressing fuel poverty; however, there have been several European Council Directives that contain measures that have the potential to alleviate some aspects of fuel poverty. Table 1 summarises these directives. Directive Name European Council Directive 2002/91/EC on the energy performance of buildings European Council Directive 2003/54/EC concerning common rules for the internal market in electricity European Council Directive 2003/55/EC concerning common rules for the internal market in natural gas Relevant fuel poverty elements Sets minimum requirements of energy performance in new buildings and major renovations and introduces Energy Performance Certificates. Requires Member States to ensure that there are adequate safeguards to protect vulnerable customers, including measures to help them avoid disconnection (p42). Also requires transparency of contract, dispute settlement mechanisms and the ability of consumers to switch supplier. Requires Member States to ensure that there are adequate safeguards to protect vulnerable customers, including appropriate measures to help 20

21 European Council Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market European Council Directive 2005/32/EC establishing a framework for the setting of ecodesign requirements for energy-using products European Council Directive 2009/72/EC concerning common rules for the internal market in electricity European Council Directive 2009/73/EC concerning common rules for the internal market in natural gas them avoid disconnection (p62). Also requires transparency of contract, dispute settlement mechanisms and the ability of consumers to switch supplier. Outlaws unfair commercial practices including within the energy sector, such as misleading and aggressive practice. Vulnerable consumers are protected at a higher level, such as children and disabled people. Increases energy savings from energy using products (EUPs) such as boilers, fridges, and televisions, and requires labelling displaying the product s energy efficiency. Recognises energy poverty is a growing problem and requires affected Member States to develop national action plans or frameworks. Requires Member States to define a concept of vulnerable customers which may refer to energy poverty and, inter alia, to the prohibition of disconnection of such customers in critical times (p65). Customers must have the right to choose their supplier and to change supplier within 3 weeks. All customers must have access to accurate consumption data. Mandates Member States to create an independent energy body to manage complaints. Requires all household customers to have access to an electricity supply. Recognises energy poverty is a growing problem and requires affected Member States to develop national action plans or frameworks. Requires Member States to define the concept of vulnerable customers which may refer to energy poverty and, inter alia, to the prohibition of disconnection of gas to such customers in critical times (p103). Customers must have the right to choose their supplier and to change supplier within 3 weeks. All customers must have access to accurate consumption data. Mandates Member States to create an independent energy body to manage complaints. Requires all household customers to have access to a gas supply. Table 1: Author s summary of the relevant European Council Directives 21

22 As can be seen in Table 1, it clear that consumer protection in the energy market has been vastly improved, with a requirement for all consumers to receive an electricity and gas supply of a specified quality, accurate and timely consumption data, and a contract that specifies all the terms of service. In addition, consumers should be able to switch suppliers within three weeks, use an independent energy body to investigate complaints, and are protected from the worst consumer practices such as aggressive and misleading sales techniques. The directives can be broadly categorised as either addressing consumer protection or energy use awareness. In terms of energy use awareness, European Council Directives 2002/91/EC on the energy performance of buildings and 2005/32/EC establishing an ecodesign framework both aim to make consumers more aware of energy consumption, the former targeting buildings, and the latter targeting energy-using products. Whilst these Directives do not directly alleviate fuel poverty, an improved future housing stock will benefit future generations, whilst the benefits of drawing awareness to the energy consumption levels of electrical appliances cannot be underestimated; an analysis of five eco-labelling programs in America found that there are various factors for success, but a properly designed labeling program can be a significant stimulus for market transformation toward environmentally preferable products (Banerjee and Solomon, 2003: 120). However, some authors are critical of directives related to traded goods; Boardman for example states that these policies are only likely to benefit better-off households as poorer households tend to purchase second-hand equipment (Boardman, 2010: 191). 22

23 European Council Directives 2003/54/EC and 2003/55/EC concerning common rules for electricity and gas, 2005/29/EC concerning unfair business-to-consumer practice and Directives 2009/72/EC and 2009/73/EC concerning common rules for electricity and gas, all contain measures to enhance consumer protection. However, there are weaknesses to the directives. European Council Directives 2009/72/EC and 2009/73/EC both acknowledge energy poverty exists and require affected Member States to develop action plans, however, no definition of energy poverty is provided, and likewise, no criteria for an affected Member State is given. Similarly, in these directives, Member States are required to define a vulnerable customer possibly in relation to energy poverty, but no guidance is provided on who is likely to be a vulnerable customer, and as will be explored later in this chapter, definitions of vulnerable consumers are irregular across the EU and in some Member States, nonexistent. In addition to references to energy poverty in European Council Directives, the EESC, a consultative body of the EU, has issued an opinion piece regarding energy poverty (EESC, 2011). The committee recognises energy poverty is a new social priority that needs to be tackled at all tiers of government and the EU should provide common guidelines to ensure that all Member States adopt the same approach (2011: 53), and also suggests the EU adopt a common general definition of energy poverty that can be then be adapted by each Member State (2011: 53). An issue which affects all Member States to varying degrees is a change in fuel prices, with the EESC stating that the number of vulnerable energy consumers could 23

24 increase significantly due to fuel price increases (2011: 53). It has been suggested a recent key driver in fuel price increases has been EU energy market liberalisation (see Poggi and Florio, 2010). As well as enhancing consumer protection, the European Council Directives 2003/54/EC and 2003/55/EC contained measures to open up the internal markets in electricity and natural gas, transferring ownership from the state to the private sector. A liberalised energy market was believed to achieve efficiency gains, competitive prices and higher standards of service (European Council Directive 2009/72/EC: 55), however, Poggi and Florio have stated that households are potentially discriminated against during energy sector reforms, particularly when tariff adjustments occur with companies shifting away from cross-subsidies to the low users (Poggi and Florio, 2010: 254). In their study of social affordability of energy bills across ten European countries, Poggi and Florio found that steps towards a liberalised energy market, such as reducing public ownership in the gas sector, were correlated with higher probability of experiencing deprivation (2010: 261). What is known about current levels and measurement of fuel poverty throughout the EU? As described previously, traditionally, fuel poverty has been perceived as a British and Irish phenomenon (Healy and Clinch, 2002: 3) and consequently, the European fuel poverty literature base is quite limited, with only two published comparative studies. The main study is that conducted by Healy and Clinch (2002) who calculated the extent of fuel poverty in fourteen European countries using European Community Household Panel (ECHP) data from The ECHP was a panel 24

25 survey, running from which provided comparable data on income information, financial situation in a wider sense, working life, housing situation, social relations, health and biographical information (Eurostat, 2010c). Healy and Clinch were the first to produce a comparative empirical analysis of fuel poverty, and used six indicators of fuel poverty, both subjective and objective indicators (Healy and Clinch, 2002: 11). Subjective indicators, such as the inability to afford to heat the home adequately imply a value judgement; the concept of an adequate heat will vary between respondents, whereas an objective indicator such as lacking central heating does not require a value judgement, and is measurable. Subjective indicators Households unable to afford to heat home adequately Households unable to pay utility bills Households lacking adequate heating facilities Objective indicators Presence of damp walls and/or floors Lacking central heating Rotten window frames Table 2: Subjective and objective indicators used in Healy and Clinch's 2002 crosscomparative study The use of the indicators listed in Table 2 is influenced by the concept of consensual poverty, as pioneered by Gordon et al, which is a measure of poverty based on the inability to afford items that the majority of the general public considered to be basic necessities of life (2000: 7). Healy and Clinch s adaptation of consensual poverty captures a broad picture of fuel poverty as it analyses data such as the presence of mould, and the absence of central heating, rather than focusing exclusively on household fuel expenditure. Using the aforementioned indicators, the study found that fuel poverty was the highest in Southern Europe; with Portugal, Greece, Spain and Italy demonstrating the highest levels (Healy and Clinch, 2002: 33). 25

26 % of households per country In Northern Europe, the rates of fuel poverty were lower, but France, Belgium, the United Kingdom and Ireland exhibited relatively high incidences (Healy and Clinch, 2002: 34). Figure 1 displays the levels of an inability to heat the home adequately, a key subjective indicator in the research. Households unable to heat home adequately in EU (Healy and Clinch 2002) Countries Figure 1: Households unable to heat home adequately across EU14. Compiled from Healy and Clinch (2002) Whyley and Callender (1997) also conducted a cross-national comparison using the ECHP; although, they only compared the United Kingdom, Ireland, the Netherlands and Germany (Whyley and Callender, 1997: i). It is hard to assess their work due to limited availability of the full study, however, their results compare favourably with Healy and Clinch as they found the United Kingdom and Ireland suffered from fuel poverty more than the Netherlands and Germany (Whyley and Callender, 1997: i). As Healy and Clinch (2002) and Whyley and Callender (1997) both used data from the 1994 to 1997 ECHP dataset, there is a large gap in knowledge regarding fuel poverty in EU Member States post The EU has enlarged noticeably since 1997, 26

27 with the accession of many Former Soviet Union countries, which Boardman argues will cause fuel poverty to become an EU wide concern as during the communist era heat and other forms of power were included in the rent as a social necessity, leading to heavy subsidies to keep prices affordable (Boardman, 2010: 15) subsequently, the removal of subsidies and a move towards a competitive energy supply has meant most governments have been unable to develop the necessary social safety nets to protect vulnerable households from energy price increases (Buzar, 2007: 1). In addition, Boardman argues that subsidised energy during the communist era resulted in a lack of attention to the energy efficiency of the dwelling, no meters to monitor the amount of electricity or heat used, and an absence of awareness of its importance in the population, among architects and planners (Boardman, 2010: 15). As a result of these factors, it is likely residents of Former Soviet Union countries are experiencing fuel poverty, a relatively new phenomenon; however, no cross-comparative analysis has been conducted to date. More recently, the EU has funded a project to analyse fuel poverty, the European Fuel Poverty and Energy Efficiency (EPEE) project, which studied the United Kingdom, Spain, Italy, Belgium and France. Its aims were to increase knowledge and understanding of fuel poverty and to develop effective remedial mechanisms (EPEE, 2009: 2). EPEE assessed current fuel poverty policy across the five countries in their study, and found that the level of recognition of fuel poverty, and consequently the level of policy interventions, varied considerably. And as outlined previously, the EPEE project estimated fuel poverty rates across Europe to be between 50 million and 125 million people (EPEE, 2009: 4). The United Kingdom was found to have the greatest 27

28 level of knowledge and understanding of fuel poverty, whilst in Spain fuel poverty is not recognised at any significant level there is no perception of fuel poverty as a compelling social problem (EPEE, 2009: 7), in spite of Healy s (2004) findings that southern European countries suffer from the highest levels of fuel poverty in Europe. Southern Europe is a region that is often overlooked in terms of fuel poverty, despite the fact many parts of southern Europe also face cold winter temperatures their housing stocks appear to be highly energy inefficient, and they are also the poorest countries in Europe (Healy and Clinch, 2002: 7), and when analysed by the indicator inability to afford to heat the home adequately, Healy and Clinch found that an alarming 45.5% of households in Greece, 54.9% in Spain and 74.4% in Portugal declare this inability (Healy and Clinch, 2002: 12). Vulnerable households Whilst the majority of EU Member States do not have an official understanding of or definition for fuel poverty, the wider concept of vulnerable households is recognised in some Member States 2. In a review of the definitions of vulnerable customers, the European Regulators' Group for Electricity and Gas surveyed energy regulators in twenty five Member States, with a focus on the existence of support systems, and qualifying households (ERGEG, 2009). The review found that eight countries, Belgium, Bulgaria, United Kingdom, Greece, Hungary, Ireland, Italy and 2 Currently in the United Kingdom, the definition of a vulnerable household with regard to fuel poverty is a household containing an elderly person, children, or householder who is disabled or has a long-term illness (DTI, 2001: 10) 28

29 Slovenia, stated that the term vulnerable customer is commonly known or used (ERGEG, 2009: 11). However, there is no official definition of the term within the EU (ERGEG, 2009) and the conceptualisation of a vulnerable household varies within and between countries. In a United Kingdom context, Boardman argues that an issue that would benefit from some greater political transparency is the definition of vulnerable households (2010: 24), she further states that the definition of a vulnerable household used in the United Kingdom Fuel Poverty Strategy (DTI, 2001) was not consistent with those used by other departments (Boardman, 2010: 24). This further complicates the issue of defining and measuring fuel poverty if there is no standard definition of a vulnerable household, especially if the definition varies between government departments, as in the United Kingdom. Dissertation rationale At the beginning of this chapter, the health and wellbeing impacts of fuel poverty were discussed, such as the correlation between cold, damp housing and negative health outcomes, increased levels of stress and social isolation, and damaging effects on children s development. In addition, the extreme outcome of fuel poverty, EWM, was discussed, a phenomenon which is found across a range of Member States, including Southern European countries. It is clear that fuel poverty has a severe impact on health, and it is probable that the United Kingdom experiences, as detailed in academic studies, are to be found in other Member States. 29

30 The EU has introduced a range of policies that impinge on energy use awareness and consumer protection, however, the EU has shown a lack of leadership and clarity with regard to fuel poverty, with no definition or guidelines provided in European Council Directives that mention energy poverty. Across the EU, only two Member States have an official definition of fuel poverty, the United Kingdom and Ireland. A common definition of a vulnerable household does not exist either, with only eight Member States recognising and using the term in relation to gas and electricity (ERGEG, 2009). As the EESC has stated, not all Member States are addressing this problem and those that are, act on their own, without seeking synergies with other, which makes it harder to identify, assess and deal with energy poverty at the European level (2011: 56). Given the inconsistency and lack of clarity resulting from multiple competing definitions of fuel and energy poverty, and the out-dated nature of previous cross comparative fuel poverty research (see Healy and Clinch, 2002; Whyley and Callender, 1997) the study of European fuel poverty is timely. By considering the questions, how is fuel poverty conceptualised across the EU? And what levels of fuel poverty exist? The dissertation goes some way towards concurrently identifying what conceptualisations of fuel poverty exist, and gaining an insight into the potential levels of fuel poverty across the Member States by conducting secondary data analysis of the EU-SILC data. The following chapter provides a contextual background to the twenty Member States studied in this research, whilst the methodology chapter following on from this will outline in detail how the proposed research questions will be addressed. 30

31 Chapter Three: Overview of study countries The following chapter provides an overview of the climate conditions and energy efficiency levels across the twenty seven Member States and gives a basic account of the relevant socioeconomic statistics. As will be explained in Chapter Four, the Member States have been arranged into four regional groups, as dictated by the Multilingual Thesaurus of the EU (EuroVoc, n.d.). As there is a vast diversity of countries within the EU, this information will be useful in providing a context for the forthcoming research findings in Chapters Five, Six and Seven. Climate and energy consumption Within this section, data is presented on household energy consumption for space heating 3 in the years 2000 and 2008, and overall household energy consumption with climate adjustment, taken from the Odyssee energy efficiency indicators database, which is a project supported under the Intelligent Energy Europe Programme of the European Commission (Odyssee, n.d.). In addition, data for the annual heating degree days, which express the severity of the cold in a specific time period taking into consideration outdoor temperature and room temperature (Gikas and Keenan, 2006: 4) has been provided in order to give an indication of the countries likely to be most in need of adequate safeguards to prevent fuel poverty. Due to the calculation method used for heating degree days, there can be more heating degree days than the number of days in a year, which is slightly misleading, although it does 3 Space heating is the process of providing warmth to rooms within a household, usually be means of central heating. 31

32 provide an indication of the severity of cold weather. Heating degree days are calculated as follows: (18 C - Tm) x d if Tm is lower than or equal to 15 C (heating threshold) and are nil if Tm is greater than 15 C where Tm is the mean ((Tmin + Tmax)/ 2) outdoor temperature over a period of d days. Calculations are executed on a daily basis (d=1), added up to a calendar month - and subsequently to a year - and published for each Member State separately. (Gikas and Keenan, 2006: 4) As can be seen in Figure 2, the annual heating degree days across the EU in the year 2009 varied considerably, with countries within Northern Europe experiencing the highest number of heating degree days, and Southern European countries experiencing the lowest number of heating degree days. As has been stated previously, only the United Kingdom and Ireland possess a fuel poverty definition, and so their relatively middling ranks of twelfth and fourteenth mildest countries, based on heating degree days, indicates that climate conditions are not the sole driver of fuel poverty policy. Figure 2: Annual heating degree days across EU-27 in Compiled from Eurostat data (2010b) 32

33 Figure 3 displays energy consumption for households across the EU in 2000 and 2008, with the exception of Lithuania. Across Northern Europe, most countries increased their energy consumption between 2000 and 2008, except for households in Estonia who marginally decreased their energy consumption, and in Sweden where households significantly reduced their energy consumption. The reverse was found in Eastern Europe, where all countries reduced their energy consumption, bar in the Czech Republic, which experienced a marginal increase in energy consumption. Half of Southern Europe countries decreased their consumption, whilst the remaining half increased energy consumption. Meanwhile, all Western European countries decreased their energy consumption, with the biggest reductions found in Austria and France. The drivers of energy consumption reductions and increases are likely to vary between regions, for example, within Eastern Europe it is probable that the decrease in energy consumption is a consequence of the removal of subsidised energy tariffs and a subsequent awareness of energy efficiency within the housing stock. Within other regions, the drivers are not as apparent, and as EU Directives concerning energy efficiency were not implemented until around 2007, EU policy cannot have had much effect on the energy savings (ADEME, 2009: iii), and a full analysis of EU energy efficiency trends is beyond the scope of this research. 33

34 Figure 3: Overall household energy consumption across EU27. Compiled from Odyssee data (Odyssee, n.d.) In comparison to overall household energy consumption, household consumption for space heating decreased in every country within Northern Europe, as shown in Figure 4. The results for Eastern Europe mirror the previous findings, with a household decrease in space heating energy consumption found in all countries except the Czech Republic. By comparison, an increase in energy consumption for space heating was found in a third of Southern European countries, a third of countries decreased their consumption between 2000 and 2008, and Italian household consumption remained the same. As before, all Western European countries reduced their household space heating energy consumption. The reduction in energy consumption for space heating may reflect an improvement in household energy efficiency levels, although it may also reflect a reduction in the use of space heating in response to rising fuel prices. 34

35 Figure 4: Household energy consumption for space heating in 2000 and Compiled from Odyssee data (Odyssee, n.d.) Socioeconomic indicators Across this section, the Gross Domestic Product (GDP) per capita and Human Development Index (HDI) scores have been provided for each Member State. The GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products (World Bank, n.d), whilst the HDI is a composite measure of human development, which measures the average achievements in a country in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living (UNDP, 2010: 216). These two measures have been included in order to understand the relative economic performance of countries within the EU, as well as the quality of life for citizens within each country. The highest GDP per capita value is found in Luxembourg, with a value of $108,747, which is over three times higher than the EU average of $31,498, as shown in Figure 5. The lowest GDP per capita values are found in Bulgaria and Romania, with values of $6310 and $7535 respectively. Overall, countries within Eastern Europe have 35